Neil Doherty - Faculty Research in Knowledge@Wharton

Micro Insurance: A Safety Net With Too Many Holes?

Wed, 30 Sep 2009 17:48:04 EST

Unlike micro lending -- the better-known side of micro finance -- micro insurance has been a hard sell among the world's poor. The reasons why include a lack of understanding of how insurance products work, a general reticence on the part of poor populations to part with their meager financial resources, badly designed products and a shortage of localized risk management knowledge among providers. What needs to happen for micro insurance to prove that it can be both socially beneficial and economically viable?

One War We Shouldn't Avoid: A New Approach to Reducing the Cost of Future Catastrophes

Wed, 08 Jul 2009 16:18:09 EST

In 2005, three major hurricanes -- Katrina, Rita and Wilma -- struck the U.S. Gulf Coast area, causing not just death and destruction, but also leading to insurance payments and federal disaster relief of more than $180 billion. Today, say the authors of a new book titled, At War with the Weather: Managing Large-Scale Risks in a New Era of Catastrophes, the U.S. is even more vulnerable to catastrophic losses. Written by Howard Kunreuther and Erwann Michel-Kerjan, with colleagues Neil Doherty, Martin Grace, Robert Klein and Mark Pauly, At War with the Weather analyzes current thinking about catastrophes and proposes new solutions for reducing loss and providing financial protection against future disasters. Kunreuther, co-director of Wharton's Risk Management and Decision Processes Center, and Michel-Kerjan, the Center's managing director, recently talked to Knowledge@Wharton about their book.

For Airlines and Others, Even the Best Fuel-price Bets Can Lead to Turbulence

Wed, 12 Nov 2008 15:45:28 EST

No one can accurately forecast what the price of oil will be in three days, much less three months, a fact that has played havoc this year with the finances of airlines and other industries that need a steady supply of fuel. For such firms, locking in prices when they seem to be at their lowest represents a high-stakes gamble.

Leveraging Risk Management

Wed, 01 Mar 2006 16:41:27 EST

Over the past couple of decades, executives have become ever more adept at neutralizing risk with a battery of instruments, including not just insurance but a variety of derivatives based on currencies, securities and credit ratings, as well as customized contracts with counterparties. It's even possible to hedge the weather. Ideally, executives should look at the forest, not the individual trees, when it comes to managing risk, but that has not been the general practice, notes Wharton insurance and risk management professor Neil A. Doherty. Academic work over the past few years, he notes, has shown that a more sophisticated and comprehensive approach to risk management can increase a company's value by a significant amount.

Are Eliot Spitzer's Insurance Lawsuits Hitting the Wrong Targets?

Wed, 19 Oct 2005 16:43:39 EST

On September 15, New York State Attorney General Eliot Spitzer indicted eight former executives from Marsh & McLennan Companies -- Marsh itself was not charged -- for their part in an alleged bid-rigging scheme. For Spitzer, bid-rigging is just part of the problem with the insurance industry. He says that another practice, contingent commissions, also artificially inflates the price of commercial insurance and therefore should no longer be allowed. Yet according to Wharton professor J. David Cummins, "contingent commissions can help keep property-casualty and other markets efficient," and may "actually level the playing field by giving buyers and sellers equal access to vital market information."

The Financial Risks of Terrorism: Balancing Public and Private Roles

Wed, 07 Sep 2005 15:24:58 EST

Who should pay for the economic consequences of a terrorist attack in the United States? This week, the Wharton Risk Management and Decision Processes Center publishes TRIA and Beyond, an analysis of the Terrorism Risk Insurance Act of 2002 (TRIA), which will expire December 31, 2005, if not renewed. The Risk Center's report offers policymakers, key industry representatives and other interested parties an analysis of what roles the public and private sectors should play with respect to terrorism risk coverage in the United States.

A Finger on the Pulse of Berkshire Hathaway and Warren Buffett

Wed, 01 Jun 2005 16:49:02 EST

Throughout the spring, the snowballing financial scandal at insurance giant American International Group has put the spotlight on the firm's partner in the improper deal, General Re Corp. Could the damage extend to Gen Re's owner, Berkshire Hathaway Inc. and its legendary chief, Warren Buffett? The questions about Gen Re come on top of another that gets larger every year: Can Berkshire continue to deliver outsized returns to shareholders after 74-year-old Buffett, who has run the company for four decades, passes from the scene?

Can AIG Stay on Top?

Wed, 01 Jun 2005 16:49:37 EST

To the lengthening list of fallen executives, add one more: Maurice "Hank" Greenberg, legendary CEO of American International Group, was forced to step down March 14 as investigators look at whether the company used complex insurance transactions to improperly pad its bottom line. Greenberg's departure, after a four-decade reign that turned AIG from a sleepy also-ran into the world's biggest insurer, immediately raises questions about whether the company can stay on top -- or whether shareholders will suffer, as they have in so many corporate scandals.

Insurance Industry Conference Looks at Terrorism, Drug Coverage, Malpractice Insurance and M&As

Wed, 28 Jan 2004 13:48:21 EST

The role of government in supplementing the private insurance industry and the industry’s response to terrorism were recurrent themes at the seventh annual conference of Wharton’s Financial Institutions Center and the Brookings Institution held earlier this month in Washington, D.C. The conference, titled “Public Policy Issues Confronting the Insurance Industry,” included discussion of such topics as mergers and acquisitions in the European insurance industry, insurers’ and legislators' response to the Sept. 11, 2001, terrorist attacks, Medicare prescription drug benefits and medical malpractice insurance.

The New Business Reality

Wed, 30 Jan 2002 00:00:00 EST

ideas about what effect those events would have on business and the economy. It was clear, however, that even before the attacks, major changes were underway that would alter the business landscape. To help understand these changes, Wharton�s Aresty Institute of Executive Education held a three-day symposium in December called Wharton on the New Business Reality: Scenarios and Strategies for the Future. Knowledge@Wharton covered the symposium.

How Will Insurers Deal With Their Most Expensive Catastrophe?

Wed, 26 Sep 2001 00:00:00 EST

Every past catastrophe is dwarfed by the impact that the terrorist attacks will have on the insurance industry. Among the issues that shell-shocked insurers and re-insurers are grappling with are workers� compensation losses, business interruption losses and property losses. Estimates suggest the industry�s exposure could be anywhere between $15 billion and $40 billion. Wharton professors and industry experts offer some suggestions, including a stronger role for the government as the �insurer of last resort.�

China�s Great Leap Outward

Tue, 21 Mar 2000 17:03:44 EST

However troublesome relations between the U.S. and China have been over the past decade, it�s clear that the trade pact signed last week is heady stuff. By partially clearing the way for China to enter the World Trade Organization (WTO), the U.S. has offered domestic industries their best opportunity ever to tap into a marketplace of 1.25 billion consumers. Should the trade accord be approved � by the U.S. Congress and by major trading partners such as the European Union - the U.S. will benefit from lower tariffs on its exports to China while China will gain new jobs, new technology, new foreign investment and perhaps most important, new respect as a member of the global trading community. Knowledge@Wharton asked five Wharton faculty members to analyze this historic agreement and comment on its implications: Ming-Jer Chen, founding director of Wharton�s Global Chinese Business Initiative; legal studies professor G. Richard Shell; finance professor Richard Herring; operations and information management professor G. Anandalingam; and insurance professor Neil Doherty.